PEARSON VUE LIFE INSURANCE EXAM 2 LATEST
VERSIONS 2024 (VERSION A AND B) COMPLETE 170
QUESTIONS AND CORRECT DETAILED ANSWERS
(VERIFIED ANSWERS) |ALREADY GRADED A+
Health Maintenance Organizations - ANSWER: Healthcare financing and delivery
corporations that contract with physicians, hospitals and others to provide services
to beneficiaries, rather than cash reimbursement
Preferred Provider Organizations - ANSWER: Healthcare intermediaries between
sponsors (e.g., employers) and physicians/hospitals who agree to provide services at
a discounted rate.
Healthcare financing in the US is typically financed through: - ANSWER: General tax
revenue
Under a social insurance model
Through a private insurance systems
From and individual's or family's personal resources (out-of-pocket)
Some combination of 1-4.
Reasons for High Numbers of Uninsured in the Affordable Care Act - ANSWER: Costs
Lack of awareness of coverage that is available
Confusion about eligibility for coverage
Adverse selection - ANSWER: Individuals have much more information about their
health status and likelihood to use medical services than do insurers. Thus those who
are most likely to consume medical services will be mostly likely to buy insurance—
since they are effectively buying the coverage below actual cost. Consequently, low-
risk individuals end up subsidizing high-risk individuals Screening for health status
can help but this is expensive.
Moral Hazard - ANSWER: 3rd-party payment for medical services increases moral
hazard in the sense that: i.e., the presence of the insurance changes loss
prevention/minimization behavior of the insured. In other words, the insured
becomes less risk-averse and will be inclined to consume more medical resources.
Insureds will tend to think the price of medical care is zero or equal to their
deductible or co-pay and will therefore overconsume medical care. People also have
less of an incentive to maintain their health.
Basic Provisions of the ACA - ANSWER: Lifetime and annual limits on coverage
prohibited
Preexisting condition exclusions prohobited
Rescission of insurance policies prohibited
Retention of coverage until age 26
Guaranteed access to health insurance
, Grandfathered plans
Medical loss ratios
Catastrophe plans - ANSWER: Catastrophe Plans offer, on average, less than 60% of
total average annual cost of care
Available only to people under 30 or those with a "hardship" exemption (e.g.,
homeless, death of close family member)
Low monthly premiums but deductibles and co-payments are high (up to $6,450 for
an individual and $12,900 for a family in 2015)
Includes 3 primary care visits at no cost
Coinsurance - ANSWER: is the percentage of the bill in excess of the deductible
which the insured must pay out-of-pocket up to some maximum dollar limit
Health Savings Account - ANSWER: A tax-exempt (qualified) account established
solely with the purpose of paying qualified medical expenses of the account
beneficiary who is covered under a high deductible health insurance plan
Medicare - ANSWER: U.S. social insurance program covering the elderly (defined as
65+)
Medicare Part A - ANSWER: Pays for hospital stays of up to 90 days subject to cost-
sharing provisions (per hospitalization)
Part A also pays for up to 100 days in a skilled nursing facility
No coverage for non-institutional care in the home or on an outpatient basis
Medicare Part B - ANSWER: Pays for physician, nursing and testing services as well as
durable medical equipment such as mobility devices (e.g., wheel chairs), prosthetic
devices, oxygen supply machines, etc.
Medicare Part C - ANSWER: Provides the option of receiving Medicare benefits under
private insurance plans known as Medicare Advantage Plans, which are available to
people with both Medicare A and B coverage
Medicare Part D - ANSWER: Pays for prescription drug benefits
Sold as standalone plans distinct from Parts A, B, C
Sold only by private insurers
Medicaid - ANSWER: Jointly funded federal/state insurance program for certain low-
income and needy people
Long-term care insurance - ANSWER: Type of coverage that pays a daily or monthly
benefit for medical or custodial care received in a nursing facility, hospital or home.
3 types of long term care insurance policies - ANSWER: Expense-incurred policies
(most common)
indemnity policies
VERSIONS 2024 (VERSION A AND B) COMPLETE 170
QUESTIONS AND CORRECT DETAILED ANSWERS
(VERIFIED ANSWERS) |ALREADY GRADED A+
Health Maintenance Organizations - ANSWER: Healthcare financing and delivery
corporations that contract with physicians, hospitals and others to provide services
to beneficiaries, rather than cash reimbursement
Preferred Provider Organizations - ANSWER: Healthcare intermediaries between
sponsors (e.g., employers) and physicians/hospitals who agree to provide services at
a discounted rate.
Healthcare financing in the US is typically financed through: - ANSWER: General tax
revenue
Under a social insurance model
Through a private insurance systems
From and individual's or family's personal resources (out-of-pocket)
Some combination of 1-4.
Reasons for High Numbers of Uninsured in the Affordable Care Act - ANSWER: Costs
Lack of awareness of coverage that is available
Confusion about eligibility for coverage
Adverse selection - ANSWER: Individuals have much more information about their
health status and likelihood to use medical services than do insurers. Thus those who
are most likely to consume medical services will be mostly likely to buy insurance—
since they are effectively buying the coverage below actual cost. Consequently, low-
risk individuals end up subsidizing high-risk individuals Screening for health status
can help but this is expensive.
Moral Hazard - ANSWER: 3rd-party payment for medical services increases moral
hazard in the sense that: i.e., the presence of the insurance changes loss
prevention/minimization behavior of the insured. In other words, the insured
becomes less risk-averse and will be inclined to consume more medical resources.
Insureds will tend to think the price of medical care is zero or equal to their
deductible or co-pay and will therefore overconsume medical care. People also have
less of an incentive to maintain their health.
Basic Provisions of the ACA - ANSWER: Lifetime and annual limits on coverage
prohibited
Preexisting condition exclusions prohobited
Rescission of insurance policies prohibited
Retention of coverage until age 26
Guaranteed access to health insurance
, Grandfathered plans
Medical loss ratios
Catastrophe plans - ANSWER: Catastrophe Plans offer, on average, less than 60% of
total average annual cost of care
Available only to people under 30 or those with a "hardship" exemption (e.g.,
homeless, death of close family member)
Low monthly premiums but deductibles and co-payments are high (up to $6,450 for
an individual and $12,900 for a family in 2015)
Includes 3 primary care visits at no cost
Coinsurance - ANSWER: is the percentage of the bill in excess of the deductible
which the insured must pay out-of-pocket up to some maximum dollar limit
Health Savings Account - ANSWER: A tax-exempt (qualified) account established
solely with the purpose of paying qualified medical expenses of the account
beneficiary who is covered under a high deductible health insurance plan
Medicare - ANSWER: U.S. social insurance program covering the elderly (defined as
65+)
Medicare Part A - ANSWER: Pays for hospital stays of up to 90 days subject to cost-
sharing provisions (per hospitalization)
Part A also pays for up to 100 days in a skilled nursing facility
No coverage for non-institutional care in the home or on an outpatient basis
Medicare Part B - ANSWER: Pays for physician, nursing and testing services as well as
durable medical equipment such as mobility devices (e.g., wheel chairs), prosthetic
devices, oxygen supply machines, etc.
Medicare Part C - ANSWER: Provides the option of receiving Medicare benefits under
private insurance plans known as Medicare Advantage Plans, which are available to
people with both Medicare A and B coverage
Medicare Part D - ANSWER: Pays for prescription drug benefits
Sold as standalone plans distinct from Parts A, B, C
Sold only by private insurers
Medicaid - ANSWER: Jointly funded federal/state insurance program for certain low-
income and needy people
Long-term care insurance - ANSWER: Type of coverage that pays a daily or monthly
benefit for medical or custodial care received in a nursing facility, hospital or home.
3 types of long term care insurance policies - ANSWER: Expense-incurred policies
(most common)
indemnity policies
